Amicus Curiae Brief — Gisbrecht v. Barnhart

No. 01-131

. IN THE

Supreme Court of the United States

GARY E. GISBRECHT, BARBARA A. MILLER.

and NANCY SANDINE,

Petitioners,

JO ANNE B. BARNHART,

Commissioner of Social Security,

Respondent.

On Writ of Certiorari to

The United States Court of Appeals

for the Ninth Circuit

BRIEF OF WASHINGTON LEGAL FOUNDATION

AND ALLIED EDUCATIONAL FOUNDATION

AS AMICI CURIAE IN SUPPORT OF RESPONDENT

DANIEL J. POPEO

RICHARD A. SAMP

(Counsel of Record)

WASHINGTON LEGAL

FOUNDATION

2009 Massachusetts Ave., NW

Washington, DC 20036

(202) 588-0302

Date: February 19, 2002

catieieniataiaiaiania

AMERICAN FINANCIAL PRINTERS * WASHINGTON, DC « (202) 457-0030

~ BEST AVAILABLE COPY

QUESTION PRESENTED

When calculating a "reasonable fee" to be paid an

attorney pursuant to 42 U.S.C. § 406(b), should a court use

an hourly-based "lodestar" method (which multiplies the

hours that the attorney worked by the reasonable hourly rate,

with certain other adjustments), or should it employ a

rebuttable presumption that the attorney should receive 25%

of the benefits awarded to the plaintiff, the maximum award

permitted by the statute.

iii

TABLE OF CONTENTS

Page

TABLE OF AUTHORITIES .............055. iv

INTERESTS OF AMICI CURIAE ..........6655. l

STATEMENT OF THE CASE ............2006. 2

SUMMARY OF ARGUMENT ................. 6

DEE “EGE SSebede eevee scccresecees 8

I. Use of the Lodestar Method Better Comports with

the Language of § 406(b) Than Does Use of the

Contingency Method .......... 0 ccc eenees 8

Il. The Lodestar Method Is the Fairest Method of

Determining Appropriate Attorney Fees in Title II

Ill. Petitioners’ Reliance on Venegas Is Misplaced . . . 17

IV. Use of the Lodestar Method Is Not Overly

Complex and Thus Does Not Consume Excessive

ee le eae eiteeees 19

DE cece eececscecececvcssccecce 21

iv

TABLE OF AUTHORITIES

Cases:

City of Burlington v. Dague,

SPU PEE s oe esce paetes 1, 10, 15, 16

Hensley v. Eckerhart,

Ge Gee Pc 0 0 ohh bes eh bebe S eC en 11

King v. Palmer, 906 F.2d 762 (D.C. Cir. 1990),

vacated, 950 F.2d 762 (D.C. Cir. 1991)(en banc),

cert. denied, 50S U.S. 1229 (1992) ............ 10

Pennsylvania v. Delaware Valley Citizens Council

for Clean Air, 483 U.S. 711 (1987) ............ 11

Ramos Colon v. Sec'y of Health and Human Servs.,

Se PR, BEES wb bcc bcsedsvecéves 9

Venegas v. Mitchell,

TP IEE. cudovebedsetenceur 7,17, 18

Statutes:

Equal Access to Justice Act, 28 U.S.C. § 2412 ... 8,20

28 U.S.C. § 2412(G)(IMA) «2... eee eee eee 20

Social Security Act, 42 U.S.C. § 401 ef seg. ........ 2

WED Se eeesocceccenceteéeseens passim

_ > PPPPTTirTTTTaTirrrT Te 2

GE GE BED ccc ccccccccsescccecens 4

GB BG Sc cccccccesccesds passim

42 U.S.C. § 406(b)(1MA) .. 2... eee eee 3,17

GB GBA GERRI cc cece cccccsceccces 3

v

Page

SPU ENED aewecccescoenseosecoesas 17

GRU UEEED ccenccccsosccoseseonss 7, 18

Miscellaneous:

S. Rep. No. 404, 89th Cong., Ist Sess.,

ee) |. Serer rr 9, 11, 18

INTERESTS OF AMICI CURIAE

The Washington Legal Foundation (WLF)' is a non-

profit public interest law and policy center with supporters in

all 50 states. WLF devotes a substantial portion of its

resources to promoting fairness in judicial proceedings. To

that end, WLF has appeared before this Court as well as

other federal and state courts in numerous cases involving the

reasonableness of attorney fee awards. See, e.g., Farrar v.

Hobby, 506 U.S. 103 (1992); City of Burlington v. Dague,

505 U.S. 557 (1992); King v. Palmer, 950 F.2d 771 (D.C.

Cir. 1991) (en banc). WLF has also filed petitions with the

Federal Trade Commission and bar authorities in each of the

50 states regarding the need to more closely regulate

contingent fee agreements entered into between attorneys and

their clients.

The Allied Educational Foundation (AEF) is a nonprofit

charitable and educational foundation based in Englewood,

New Jersey. Founded in 1964, AEF is dedicated to

promoting education in diverse areas of study, such as law

and public policy, and has appeared as amicus curiae in this

Court on a number of occasions.

Those who receive disability benefits under Title II of

the Social Security Act are unable to work and thus are

unlikely to have other substantial sources of income. Amici

believe it is important that such individuals not be forced to

pay large fees to their attorneys when they are awarded such

benefits in a court proceeding. Amici are filing for the sole

' Pursuant to Supreme Court Rule 37.6, amici curiae state that no

counsel for a party authored this brief in whole or in part; and that no

person or entity, other than amici and their counsel, contributed

monetarily to the preparation and submission of this brief.

2

purpose of sharing with the Court their views regarding what

constitutes a "reasonable" attorney fee in such cases. They

have no economic interest in the outcome of this or any other

case involving fee awards under Title II of the Social Security

Act.

Amici curiae are filing their brief with the consent of all

parties. Letters of consent have been lodged with the Clerk

of Court.

STATEMENT OF THE CASE

In the interests of brevity, amici hereby incorporate by

reference the Statement contained in the brief of Respondent.

In brief, this case involves attorneys who represented

clients in successful suits to obtain disability benefits under

Title II of the Social Security Act, 42 U.S.C. § 401 et seq.’

The attorneys subsequently obtained court orders mandating

that they be paid fees out of the proceeds of the past-due

disability benefits; the attorneys seek review of those orders,

complaining that the fee awards were inadequate.

Section 206(b) of the Social Security Act, 42 U.S.C.

§ 406(b), provides that whenever a federat district court rules

? Title II provides for payment of old-age, survivor, and disability

benefits to insured individuals (i.e., those who have made sufficient

payments into Social Security, or the survivors of such individuals),

without regard to financial need. Title II does not encompass

Supplemental Security Income benefits (SSI). SSI is a welfare program

set forth in Title XVI of the Social Security Act. Disabled individuals

can become eligible for SSI payments only if they are financially

needy.

‘

3

in favor of a Title II claimant who is represented by counsel,

the court "may" provide for the payment of a "reasonable"

fee to attorney, "not in excess of 25 percent" of past-due

benefits. Section 406(b)(1(A) further provides that in such

cases in which a judgment has been entered for the claimant,

the court-ordered fee is the only one that may be paid to the

attorney for his work. It is a criminal act for an attorney to

collect or even demand an additional fee in cases in which he

is eligible for a court-awarded fee. 42 U.S.C. § 406(b)(2).’

Three attorneys, Tim, Ralph, and Etta Wilborn, repre-

sented each of the three Petitioners in their efforts to obtain

> Section 406(b) provides in relevant part:

(1)(A) Whenever a court renders a judgment favorable to a

claimant under this subchapter who was represented before the

court by an attorney, the court may determine and allow as part

of its judgment a reasonable fee for such representation, not in

excess of 25 percent of the total past-due benefits to which the

claimant is entitled by reason of such judgment, and the

Commissioner of Social Security may . . . certify the amount of

such fee for payment to such attorney out of, and not in addition

to, the amount of such past-due benefits. In case of any such

judgment, no other fee may be payable or certified for payment

for such representation except as provided in this paragraph.

(2) Any attorney who charges, demands, receives, or collects for

services rendered in connection with proceedings before a court

to which paragraph (1) of this subsection is applicable any amount

in excess of what is allowed by the court thereunder shall be

guilty of a misdemeanor and upon conviction thereof shall be

subject to a fine of not more than $500, or imprisonment for not

more than one year, or both. E

4

Title II disability benefits. Petitioners Barbara A. Miller and

Nancy Sandine were unrepresented during their unsuccessful

efforts at the administrative level to obtain disability benefits.

The Wilborns filed suits on their behalf and obtained

judgments that they were entitled to benefits. The Wilborns

spent 39.91 hours on Miller's case and 52.4 hours on

Sandine's case; the parties do not dispute the reasonableness

of those hours.

An administrative law judge (ALJ) determined that

Petitioner Gary E. Gisbrecht had been disabled from 1993 to

1996 but not thereafter; he was awarded benefits for that

three-year period only. Ralph Wilborn represented Gisbrecht

before the Social Security Administration's Appeals Council

in any unsuccessful bid to overturn the ALJ's decision.

Thereafter, the Wilborns filed suit on Gisbrecht's behalf in

federal district court. Before the district judge could rule on

the suit, the Commissioner confessed error and admitted that

Gishbrecht's disability had not ceased in 1996. Again, there

is no dispute as to the reasonableness of the 25.08 hours

devoted to the case by the Wilborns before the

Commissioner's confession of error.

Following entry of judgment in their clients' favor, the

Wilborns filed motions for fee awards in each of the three

cases. In each case, they requested an award of 25% of past-

due benefits granted to their clients. That amounted to fee

requests of $7,500 in the Miller case, $14,000 in the Sandine

case, and $7,100 in the Gisbrecht case.‘

* The Wilborns also sought and received a $2,000 fee, pursuant

to 42 U.S.C. § 406(a), for their representation of Gisbrecht before the

(continued...)

5

Each of the district courts before whom the cases were

pending granted the fee requests in amounts significantly less

than had been sought. The courts computed the fees using

the "lodestar" method: they multiplied the number of hours

devoted to the cases by a reasonable hourly fee. They then

declined requests to adjust the lodestar amount upward to

compensate the Wilborns for the contingent nature of their

representation -- i.e., the Wilborns would have received

nothing if their clients had not prevailed. Petition Appendix

("Pet. App.") 17-22; id. at 23-26; id. at 33-41. The fees

awarded to the Wilborns were $5,461.50 in the Miller case,

$6,550.00 in the Sandine case, and $3,135.00 in the

Gisbrecht case.

The U.S. Court of Appeals for the Ninth Circuit

affirmed the fee awards. /d. at 1-11. The Ninth Circuit

agreed with the district courts that the lodestar method should

be used in calculating fees under 42 U.S.C. § 406(b). Jd. at

6.° While recognizing that upward adjustments of the

lodestar fee based on the contingent nature of the represen-

tation are appropriate in some cases, the appeals court held

that the district courts did not abuse their discretion in

*(...continued)

Appeals Council. That amount is no longer at issue, and is in addition

to the fee sought by the Wilborns for their district court work.

° The appeals court noted that the Second, Sixth, and Seventh

Circuits have rejected use of the lodestar method. Those courts have

adopted the “contingency” method, under which a contingent fee con-

tract entered into between the attorney and the claimant is presump-

tively reasonable and should be enforced, so long as the contracted fee

is not greater than 25% of the past-due benefits. /d. at 6 n.2.

6

declining to grant an upward adjustment in these cases. Jd.

at 8-10. ;

The Court granted review in order to resolve the

conflict over whether the lodestar method or the contingency

method should be used in calculating fees under § 406(b).

SUMMARY OF ARGUMENT

Congress adopted § 406(b) for the express purpose of

imposing caps on the fees that attorneys could charge for

representing clients in successful federal court suits for the

recovery of Title II benefits. There are two distinct features

of the cap. First, any fee awarded must be "reasonable."

Second, fees may not under any circumstances exceed 25%

of the past-due benefits awarded as a result of the suit.

Petitioners essentially ask the Court to write the "reasonable-

{ness]" requirement out of the statute; they argue that 25% of

past-due benefits (the amount specified in virtually all

contracts entered into between attorneys and their clients

seeking Title II benefits) should be deemed presumptively

reasonable. But Congress has determined that it should be up

to the courts, not the parties, to determine what constitutes a

"reasonable" fee. The "lodestar" method -- the number of

attorney hours multiplied by a reasonable hourly rate,

followed by appropriate adjustments -- is the method that

courts historically have used to determine a "reasonable" fee

award.

Moreover, the lodestar method is the fairest method of

determining appropriate attorney fees in Title [II cases.

Petitioners concede that approximately the same number of

hours are required to prepare every Title II suit; it seems

7

only appropriate, therefore, that the fees awarded should be

relatively uniform from case to case. Use of the lodestar

method assures uniformity; use of the contingency method

does not. Cases that are delayed significantly from the date

of the alleged onset of disability to the date of award will

produce the largest past-due benefit awards -- and therefore

the largest fee awards under the contingency method. Such

delays are not a valid reason to grant premium fee awards; if

anything, attorneys ought to be given the opposite financial

incentive. Petitioners complain that the lodestar method does

not appropriately compensate attorneys for assuming the risk

that they may never be paid for their work. But such

assumption of risk to a certain extent can be and presumably

is worked into the computation of a reasonable hourly fee.

Moreover, as the Ninth Circuit recognized, the lodestar

amount can be adjusted upward where appropriate to

compensate for unusually risky representation.

Petitioners cite Venegas v. Mitchell, 495 U.S. 82

(1990), for the proposition that courts should give effect to

the intent of the parties, as expressed in the retainer contract

entered into between the attorney and his client. In Venegas,

the Court determined that Congress, when it adopted 42

U.S.C. § 1988, did not intend "to limit civil rights plaintiffs’

freedom to contract with their attorneys." /d. at 87.

Venegas is inapposite. In contrast to Congress's intent in

adopting § 1988, it is undisputed that Congress adopted

§ 406(b) precisely because it wanted to limit the right of Title

II plaintiffs to contract with their attorneys. Congress was

concerned that due to unequal bargaining positions, Title II

plaintiffs were agreeing to pay excessive fees.

Finally, the courts can administer the lodestar method

without consuming excessive judicial and attorney resources.

They have been doing so successfully for many years under

federal fee-shifting statutes as well as in Title II cases. The

Wilborns's claim that use of the lodestar method unneces-

sarily complicated these cases rings hollow, when one con-

siders that it was the Wilborns who chose to file additional

fee claims under the Equal Access to Justice Act (EAJA), a

claims process that is far more complex than use of the

lodestar method in § 406(b) cases.

ARGUMENT

I. USE OF THE LODESTAR METHOD BETTER

COMPORTS WITH THE LANGUAGE OF § 406(b)

THAN DOES USE OF THE CONTINGENCY

METHOD

The Wilborns assert that the Court should follow the

lead of the Second, Sixth, and Seventh Circuits and treat as

presumptively reasonable, and therefore controlling, any fee

agreement entered into between an attorney and a ciient

seeking Title II benefits, provided only that the agreement

does not provide for a fee greater than 25% of past-due

benefits. Because the fee agreements entered into between

the Wilborns and each of their clients provided for a fee

equal to 25% of the past-due benefits awarded by the courts,

they assert that the Ninth Circuit erred in refusing to award

them their requested 25% fee.

That argument is not consistent with the language and

legislative history of § 406(b). Congress adopted § 406(b) in

1965 because it believed that some attorneys were charging

t)

i)

9

"inordinately large fees" to represent Title II disability

benefits claimants in federal court proceedings. S. Rep. No.

404, 89th Cong., Ist Sess., Pt. 1, at 122 (1965). Section

406(b) was designed to cap such fees, without regard to the

fees that claimants might have agreed to pay, because

Congress did not believe that claimants were in a position to

bargain with attorneys in a free and informed manner

regarding fee arrangements. Ramos Colon v. Sec'y of Health

and Human Servs., 850 F.2d 24, 26 (1st Cir. 1988).

There are two distinct features of § 406(b)'s fee cap.

First, any fee awarded must be "reasonable." Second, fees

may not under any circumstances exceed 25% of the past-due

benefits awarded as a result of the suit. The "contingency"

method of fee computation urged by the Wilborns (whereby

a 25% contingent fee is presumptively reasonable) is not a

plausible reading of the statute. The contingency method

essentially writes the reasonableness requirement out of the

statute. If Congress had intended that courts should enforce

virtually every contract calling for a fee equal to 25% of the

past-due benefits awarded, there would have been no reason

for Congress to specify that § 406(b) fee awards must also be

"reasonable. "°

® There is no serious dispute among the parties that virtually

every attorney representing Title II disability claimants includes in

his/her retainer agreement a provision calling for a fee equal to 25% of

the past-due benefits awarded by the courts. Petitioners view this as

evidence that the "market" has determined that a 25% contingent fee

is the appropriate fee. To the contrary, amici view this as evidence that

Congress got it right: virtually no disability claimants are in a position

to bargain with attorneys regarding rates and therefore are in need of

protection. Moreover, it often makes little sense to refer to “market

(continued...)

E 10

The Wilborns do not dispute that use of the lodestar

method of fee computation -- which arrives at a fee by

multiplying the hours that an attorney worked by the

reasonable hourly rate, and then makes certain other

adjustments as appropriate -- results in a "reasonable" fee

being awarded to attorneys. Rather, they assert that in every

case there will be a range of reasonable fees, that that range

in most cases will include a fee based on 25% of the past-due

benefits awarded, and that the courts should defer to the

intent of the parties (as expressed in the retainer agreement)

whenever such deference would still result in a reasonable

fee. Pet. Br. 18-19.

There is no support in the statutory language for the

Wilborns's argument. The statute speaks in terms of "the

court" determining what should constitute a reasonable fee in

any given case and makes no mention of the retainer

agreement. To the contrary, in light of the purpose

underlying adoption of § 406(b) -- Congress's belief that

unequal bargaining power between attorneys and clients was

leading to "inordinately large fees" being charged in some

*(...continued)

treatment” of attorney fee issues arising under federal statutes. As the

Court has recognized, the "market" exists here, as under similar federal

statutes, only because Congress has created a cause of action for

improper denial of Title II disability benefits and then has created a

mechanism whereby up to 25 % of past-due benefits can be set aside for

payment of fees directly to the attorney involved. See City of

Burlington v. Dague, 505 U.S. 557, 564 (1992) ("'I see the judicial

judgment as defining the market, not vice versa.'") (quoting King v.

Palmer, 906 F.2d 762, 770 (D.C. Cir. 1990) (Williams, J.,

concurring), vacated, 950 F.2d 771 (D.C. Cir. 1991) (en banc), cert.

denied, 505 U.S. 1229 (1992)).

11

cases -- it is highly unlikely that Congress intended courts to

defer to the terms of the retainer agreement in establishing a

"reasonable" fee award under § 406(b).

Moreover, Congress made clear that it did not believe

that retainer agreements providing for contingent fees in

excess of 25% were the sole source of the "inordinately large

fees" to which it objected. Rather, the Senate Report

indicates that excessive fees were also a product of the

"considerable delays" frequently encountered between the

alleged onset of disability and the award of benefits;

Congress feared that such delays could result in unreasonable

fees being awarded if computation were based solely on a

percentage of the past-due benefits awarded. S. Rep. No.

404, 89th Cong., ist See., Pt. 1, at 122 (1965).

Accordingly, a rule establishing 25% contingent fees as

"presumptively reasonable" in § 406(b) cases is not consistent

with congressional intent.

In numerous other contexts in which Congress has

directed the courts to determine "reasonable" attorney fee

awards, the Court has looked to the lodestar method in

making that determination. See, e.g., Hensley v. Eckerhart,

461 U.S. 424 (1983) (fee awards in civil rights cases filed

under 42 U.S.C. § 1988); Pennsylvania v. Delaware Valley

Citizens' Council for Clean Air, 483 U.S. 711 (1987) (fee

awards under fee-shifting provisions of federal environmenta!

statutes). There is no reason to interpret Congress's use of

the word "reasonable" in § 406(b) in the radically different

manner suggested by Petitioners.

12

ll. THE LODESTAR METHOD IS THE FAIREST

METHOD OF DETERMINING APPROPRIATE

ATTORNEY FEES IN TITLE Il CASES

The lodestar method of fee computation is preferable to

the "contingency" method espoused by Petitioners because it

ensures that all fee requests will be treated equally.

By basing compensation on the number of hours spent

on a case, as well as the level of skill and training the

attorney brings to the case, the lodestar method ensures that

fee awards will be roughly equitable from case to case. The

lodestar method provides an incentive for attorneys to devote

more resources to cases where doing so is necessary to

ensure that the claimants prevail, because they know that they

will be compensated for doing so.

A unique feature of Title II litigation is the remarkable

uniformity of attorney resources required of each such case.

An attorney filing a Title II case does so on the basis of a

pre-existing administrative record. No discovery or other

time-consuming pre-trial activities are called for. Rather, the

claimant's attorney generally files a boilerplate complaint,

followed by a detailed motion for summary judgment (or its

equivalent). As Petitioners concede, Title II cases typically

consume somewhat less than 40 hours of attorney time. Pet.

Br. 35 & n.41 (citing surveys from reported decisions).

Given relatively small and roughly uniform levels of

attorney resources required by Title II cases, one would

expect that the "reasonable" fees awarded under § 406(b) to

be roughly uniform from case to case. The lodestar method

of fee computation provides just such uniformity -- while at

13

the same time allowing for variation in unique cases

involving particularly complex issues (which demand more

attorney time, or a more highly skilled attorney, or both).

In contrast, granting fees based on the presumption that

the claimant's attorney should receive 25% of the past-due

benefits award results in wildly inconsistent fee awards in

similarly situated cases. The inconsistency arises because, as

noted above, some Title II case can be delayed considerably

from the alleged onset of disability to the time of award.

Those cases encountering the greatest delays will produce the

largest past-due benefits awards. Because delay could never

be deemed a product of superior legal work, there is never a

direct correlation between the attorney's performance and

increased past-due benefits awards brought about by delay.

Moreover, once a claimant is deemed disabled, his/her

benefit level is largely pre-determined; there is rarely any

way that good attorneys can increase benefit levels beyond

establishing their clients' disabilities. Accordingly, the wide

case-to-case disparity in past-due benefit awards is wholly

unrelated to attorney performance. Use of the contingency

method thus results in wide disparities in fee awards that have

no rational basis.

The four cases that were before the Ninth Circuit well

illustrate that phenomenon. The past-due benefit awards in

those cases were as follows: Barbara Miller -- $30,100:

Nancy Sandine - $56,000; Gary Gisbrecht - $28,400; and

Donald Anderson -- $128,400. The number of attorney

hours devoted to each case was roughly equal, but the

"presumptively reasonable" fee derived using the contingency

method espoused by Petitioners varies widely from case to

case. The Wilborns's "presumptively reasonable" fee for

14

their work on behalf of Donald Anderson was more than

four-and-one-half times greater than the "presumptively

reasonable" fee for their work on behalf of Gary Gisbrecht.’

Admittedly, in the Anderson case the Wilborns did not seek

from the district court the full amount of the fee to which

they would have been entitled under the contingency method.

Pet. App. 12-16 (fee sought was $10,000, rather than

$32,000). But the Wilborn's decision to abandon the

contingency method in that case only serves to illustrate the

deficiencies of that method. Amnici submit that the Wilborns's

submission of a drastically reduced fee request in the

Anderson case indicates a recognition on their part that the

lodestar method provides a much surer and fairer means of

determining a "reasonable" fee award than does the

contingency method. There certainly is room to argue

regarding how the lodestar method is implemented in

particular cases, but it is simply too late in the day to argue

that the lodestar method is not the appropriate means by

which the federal courts determine a "reasonable" fee.

The Wilborns complain that the lodestar method does

not appropriately compensate attorneys for assuming the risk

that they may never be paid for their work. But the risk they

” The disparities in fees is particularly ironic, because the

Wilborns cite Mr. Gisbrecht's case as a prime example of how a highly

skilled attorney can increase the past-due benefits award even after a

determination has been made that the claimant is disabled. See Pet. Br.

21 n.24 ("A skilled attorney may increase the amount of benefits . . .,

as in Gisbrecht, by convincing the court that the period of disability

lasted longer.”). Yet despite the high degree of legal skill displayed by

the Wilborns in Mr. Gisbrecht's case, the contingency method of fee

awards still resulted in a far lower "presumptively reasonable” fee than

in Mr. Anderson's case.

15

assume is not unique among lawyers. Except for those few

attorneys who can demand advance payment, virtually all

lawyers must assume a certain amount of risk of nonpayment.

Accordingly, the risk of nonpayment to a certain extent can

be (and presumably is) factored into the computation of a

reasonable hourly fee. As the Court explained in City of

Burlington:

The risk of loss in a particular case (and, therefore, the

attorney's contingent risk) is the product of two factors:

(1) the legal and factual merits of the case; and (2) the

difficulty of establishing those merits. The second

factor, however, is ordinarily reflected in the lodestar --

either in the higher number of hours expended to

overcome the difficulty, or in the higher hourly rate of

the attorney skilled and experienced enough to do so.

. . . Taking account of it again through lodestar

enhancement amounts to double counting.

City of Burlington, 505 U.S. at 562-63.

City of Burlington went on to explain why, in the

context of fee awards under a fee-shifting statute, contin-

gency based on the first factor also should not lead to an

upward revision of the lodestar amount. /d. at 563. The

Wilborns accurately point out, however, that City of

Burlington is distinguishable in one meaningful respect: in a

fee-shifting case, the fees are being paid by the opposing

party, not (as here) by the party for whom the services were

performed. Pet. Br. 45. There are good reasons not to

require a losing party to pay enhanced fees to opposing

counsel simply because the losing party's case was so strong

that challenging the case entailed extra risk of non-payment;

16

we do not usually punish a party for having a strong case.

But in Title II cases, it may make sense to pay premium fees

to attorneys willing to take on especially risky cases; without

the availability of such premiums, a disability-benefits

claimant with a marginal claim might not be able to locate

counsel. If, against all odds, an attorney is able to win such

a case, the client has no cause to complain if he is asked to

pay a high-than-usual fee out of his disability award.

Accordingly, City of Burlington does not dictate that district

courts may never take risk of nonpayment into account in

determining a "reasonable" attorney fee under § 406(b).

However, the Ninth Circuit explicitly recognized that

contingency enhancements to the lodestar amount are

appropriate in those § 406(b) cases that are particularly risky.

Pet. App. 8-10. The Ninth Circuit's approach is thus

eminently fair to attorneys by ensuring that they are

compensated for assuming risks of nonpayment that exceed

the level of risk already built into hourly rates. In this case,

the district courts declined to exercise the discretion granted

to them by the Ninth Circuit to award contingency

enhancements; but the issue of whether the district courts

thereby abused their discretion in that regard is not now

before the Court. Indeed, according to the Ninth Circuit, the

Wilborns never argued that any of their four cases was

particularly risky on an individual basis. Jd. at 9 n.3.

The Wilborns claim that a majority of the Title II cases

filed in federal court are unsuccessful; they argue that without

the routine award of § 406(b) fees well in excess of an

attorney's regular hourly rate, attorneys are not being fairly

compensated for their work. But as the Ninth Circuit pointed

out, it would be patently unfair to require prevailing Title II

17

claimants -- whose claims were, presumably, far less risky at

the outset than those of the typical unsuccessful claimant -- to

pay enhanced fees in order to subsidize the filing of other

lawsuits that were more risky than their own. /d. at 9.

In sum, the lodestar method of computing fee awards --

which multiplies the number of hours that the attorney

worked by the reasonable hourly rate, and then makes

appropriate adjustments, including (on occasion) contingency

enhancements -- is the fairest method available, from the

standpoint of both clients and attorneys.*

Ill. PETITIONERS' RELIANCE ON VENEGAS IS

MISPLACED

In support of their contention that courts determining

§ 406(b) fee awards should defer to the provisions contained

in any retainer agreement, Petitioners rely on this Court's

decision in Venegas v. Mitchell, 495 U.S. 82 (1990). That

reliance is misplaced.

Venegas involved a civil rights claim brought under 42

U.S.C. § 1983 by a plaintiff who alleged that police had

* As the amicus brief supporting Petitioners points out (Amicus

Br. 15 0.8), § 406(b) appears to permit attorneys to charge Title II

clients an up-front fee at the time they take on a case; that fee would be

subject to refund under § 406(b)(1)(A) in the event that a court awarded

benefits. Such up-front fees would, of course, reduce the risk of

nonpayment at least somewhat. Because Title I] benefits are payable

without regard to financial need, it is reasonable to assume that at least

some claimants could afford to pay legal fees up front. There is no

evidence in this record, however, that market conditions would permit

attorneys to find clients willing to pay such fees.

18

conspired to deny him a fair trial through the knowing

presentation of perjured testimony. The plaintiff, Mr.

Venegas, entered into a retainer agreement with his attorney

that provided for a contingent fee equal to 40% of whatever

amounts were recovered. After Mr. Venegas won a $2.08

million judgment, counsel obtained a $75,000 fee award

under 42 U.S.C. § 1988, which provides for the recovery of

attorney fees from the losing party in a civil rights action.

Mr. Venegas thereafter sought to avoid having to pay 40% of

his judgment to his attorney pursuant to the retainer

agreement; he argued that the award of attorney fees under

§ 1988 should be in lieu of any award under the retainer

agreement. The Court unanimously disagreed, and ordered

Mr. Venegas to pay the contractually-agreed-upon fee.

Venegas, 495 U.S. at 90.

Venegas provides no support for Petitioners. It was

based on the Court's determination that Congress, when it

adopted 42 U.S.C. § 1988, did not intend "to limit civil

rights plaintiffs' freedom to contract with their attorneys."

Id. at 87. In contrast to Congress's intent in adopting

§ 1988, it is undisputed that Congress adopted § 406(b)

precisely because it wanted to limit the right of Title Il

plaintiffs to contract with their attorneys. Congress was

concerned that due to unequal bargaining positions, Title II

plaintiffs were agreeing to pay excessive fees. See S. Rep.

No. 404, 89th Cong., Ist See., Pt. 1, at 122 (1965).

Under principles of contract law, courts ordinarily will

hold contracting parties to their bargains. But Congress

determined, with respect to attorney fees charged in suits

seeking the award of Title II benefits, that fee should be

awarded based on the courts’ sense of reasonableness, not

19

based on the parties' intent. In light of that determination,

Venegas is wholly inapplicable to this case.

IV. USE OF THE LODESTAR METHOD IS NOT

OVERLY COMPLEX AND THUS DOES NOT

CONSUME EXCESSIVE RESOURCES

The Wilborns argue that the contingency method of fee

computation is superior because it is simpler to administer.

They argue that if fees equal to 25% of past-due benefit

awards are handed out as a matter of course, the process of

determining fees would be greatly simplified and would

consume far fewer judicial and attorney resources than the

lodestar method. Pet. Br. 36-39.

Amici respectfully suggest that the Wilborns are

exaggerating the difficulties of applying the lodestar method.

It has been successfully used for many years, without

imposing any undue burdens on the court system, in

connection with the numerous federal statutes that permit a

prevailing party to seek an award of "reasonable" attorney

fees from the opposing party. It has also been used

successfully in Title II cases in the many circuits, including

the Ninth Circuit, that use the lodestar method in Title II

cases. Given the near uniformity of legal effort required in

typical Title II disability cases, it should not be overly

difficult for the courts to determine a reasonable lodestar fee

in the vast majority of cases.

Adopting a rule that a fee equal to 25% of the past-due

benefits award is presumptively reasonable would, no doubt,

be somewhat easier to administer than the lodestar method.

But that rule turns a blind eye to the statutory language of

20

§ 406(b) and to Congress's mandate that the courts guard

against excessive fees caused by lengthy delays from the

alleged onset of disability to the date of judgment.

Moreover, the Wilborns are in no position to complain

about any complications brought on by the Ninth Circuit's

use of the lodestar method. In each of the three cases before

the Court, the Wilborns applied for (and obtained) fees under

the Equal Access to Justice Act (EAJA), 28 U.S.C. § 2412.

EAJA fees are available to prevailing parties only where the

court determines that the position of the United States was not

"substantially justified" and that no special circumstances

"make an award unjust." 28 U.S.C. § 2412(d)(1)(A).

Clearly, because a determination regarding whether the

government's position in a Title II case was “substantially

justified" requires a careful re-examination of the entire case,

any fee award request under EAJA will be far more

complicated than a fee request under § 406(b) decided

pursuant to the lodestar method. Accordingly, had the

Wilborns's number one goal been to keep the fee issue

simple, they never should have filed EAJA requests.

Apparently, filing EAJA petitions resulted in a slight net gain

for the Wilborns.’ But attorneys who believe it is worth their

while to litigate the issue of whether the government's

position was “substantially justified" should not be heard to

complain about the relatively slight evidentiary burdens

imposed on them by use of the lodestar method in § 406(b)

fee proceedings.

® The Wilborns received slightly more fees under § 406(b) than

under EAJA in the Miller case and slightly less under § 406(b) in the

Gisbrecht and Sandine cases.

21

CONCLUSION

For the foregoing reasons, amici curiae Washington

Legal Foundation and Allied Educational Foundation

respectfully request that the judgment of the court of appeals

be affirmed.

Respectfully submitted,

Daniel J. Popeo

Richard A. Samp

Washington Legal Foundation

2009 Massachusetts Ave., NW

Washington, DC 20036

(202) 588-0302

Counsel for the amici

Dated: February 19, 2002